A home warranty company’s primary goal is to make your clients feel secure and protected in their new purchase. It’s scary to buy a home and not know the state of the systems and appliances inside. A home warranty can provide that peace of mind and protection.

One of the complaints home warranty companies get from new homeowners is that their home warranty didn’t cover something their agent miscommunicated would be covered. We had a situation where a homeowner’s air conditioning unit failed — something our contract had no limits on as long as the unit failed from normal wear and tear.

When the contractor opened up the air conditioner, the problem was obvious: The previous owner had power-washed the unit, crushing the condenser coils.

Damage to the unit was noted on the buyer’s home inspection report, which was performed prior to the close of sale and the effective date of home warranty coverage. Because the unit failed due to abuse rather than normal wear and tear, we were unable to make the repair for the homeowner. The owner was frustrated and said, “But my Realtor told me a home warranty would cover everything!”

Not only was this a frustrating experience for the homeowner, but it was also troubling for the Realtor involved. Although we wish we could cover everything in a home, for the home warranty industry to be fair to all its contract holders, coverage guidelines must be followed consistently, just like homeowners insurance.

Home warranty companies want to make sure that real estate clients get the coverage they expect. This infographic on what a home warranty covers and how the home warranty process works can be helpful to share with them:

Download this infographic to share it with your clients. Although home warranty companies have different contracts, this covers the basics of a home warranty.

Review the home inspection report before a home closes

Leverage this time before a closing to get as many home improvements made as possible. Before closing, make sure your client gets a home inspection. Home inspections should be detailed and thorough, and it isn’t a bad idea to go through the inspection with your client.

If there are problems that are in the home, discuss them with your buyer and negotiate the repair or perhaps a decrease in listing price from the seller for those issues. Encourage your client to get a second opinion from a service contractor after the repairs are finished.

Review the home warranty contract with your client

Get a sample contract from the home warranty company your seller chooses. Advise your client to discuss the ins and outs of the contract. If they have questions, have them call into the home warranty company’s customer service for detailed explanations.

Make it clear that a home warranty covers home systems and appliances that have failed from ordinary wear and tear.

Let them know that if a system or appliance fails, they can call their home warranty company directly. Most home warranties have 24/7 claims assistance and will send a qualified service professional to their property to make a repair or replacement for a $50 to $60 service call fee.

Home warranties and home insurance are not the same

Home insurance is a requirement with a home mortgage, and it covers damage from natural disasters, floods and burglary. Home warranties cover the systems that make up the home, as well as the appliances homeowners use day to day.

All home warranty companies have different levels of coverage, which usually depend on the price of the warranty.

However, most protection plans cover:

Heating systems

Cooling systems

Plumbing systems

Electrical systems

Appliances such as:

Dishwasher

Garbage disposal

Oven

Home warranty companies have limits and exclusions

Although home warranties cover most systems and appliances, they sometimes have limits and exclusions on certain items. For example, Landmark Home Warranty has no limits on gas furnaces, but a specialty heating system, such as radiant heaters, have a $1,500 limit. This limit means our home warranty company will pay however much it costs to repair or replace the typical gas furnace, but can pay only up to $1,500 on radiant or geothermal systems.

Sometimes exclusions might not apply to the particular home they are purchasing. Even so, it’s always a good idea to make your client aware of possible limits so that they know what to expect.

Home warranties cover only failed items, not improper maintenance

Remember the condenser coil example in the beginning? Home warranties cover systems and appliances that fail from normal wear and tear. Depending on the age of a system or device, parts will just stop working. Motors, fans, electrical components and more will go out with age.

As long as a reasonable effort has been made to maintain the unit and it was working when the homeowner purchased the home, when it fails, the home warranty will cover any repairs and replacements needed. On the other hand, if the owner takes a hammer to a wall and bursts a pipe, a home warranty would most likely not cover the repair or replacement.

An educated client is a happy client

Using these tips, your client will know what their warranty does and doesn’t cover. They won’t be blindsided by a costly repair or replacement that wasn’t covered in the contract, and you will maintain a good working relationship with them, as their real estate agent.

Whitney Baum-Bennett is the SEO Specialist at Landmark Home Warranty. She creates informative articles and graphics about everything from buying a first home to how to fix your toilet; see more of her content here.

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Yesterday, I got a phone call from a buyer client of mine whom I helped to close on a home about three weeks ago. He opened the conversation by asking me if I was there at the home inspection (he was out of the state at the time).

Getting clients into a newly built home can be thrilling, but there are things you, and they, need to know ahead of time to help them have the best experience possible. You’ll be able to help clients move into their house feeling confident that you’ve done everything to ensure it will be a home by staying involved in the process with a little research.